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>> susie: a big triple-digit rally on wall street, thanks to big profits from corporate america and a breathrough in those debt talks in washington. >> tom: then, after the closing bell, apple is top banana in the company reports staggering earnings as consumers buy a record 20 million iphones. it's "nightly business report" for tuesday, july 19. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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captioning sponsored by wpbt >> tom: good evening and thanks for joining us. a banner day for blue chips. the dow surged more than 200 points, its best one-day performance this year. at the close, the dow added 202 points, the nasdaq rose 61 and the s&p 500 up 21 points. then after the bell, susie, apple did it again, posting stunning earnings. >> susie: tom, we're running out of adjectives to describe the amazing growth at apple. it earned $7.79 a share in its fiscal third quarter, crushing estimates by almost $2. revenues also came in better
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than expected, up 82% to $28.5 billion. and that growth comes as consumers keep snapping up apple products. 20 million iphones were sold in the quarter, more than nine million ipads, about four million mac laptops and 7.5 million ipods. as the company said today, it "sold every ipad it could make." >> tom: they are impressive numbers, according to gba research analyst david garrity. >> these are phenomenal. these are stronger than we saw around the year-end holiday shopping period in the fourth quarter. certainly a clear indication consumers are choosing the areas where they wish to spend and they're continuing to support that. >> tom: in after-hours trading, apple shares surged as much as 7%, crossing over $400. suzanne pratt looks at whether apple will remain delicious for investors. >> reporter: apple users are
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pretty passionate about their gadgets. stop an iphone, ipad or mac owner on the street and you get this: >> the diverse range of things that you can do on it is fanstastic. i mean, it's everything i ever needed it for. >> i love my laptop. i can't live without it! >> reporter: that enthusiasm, however, is less evident lately in the performance of apple stock. sure the shares are up a respectable 16% this year to an all-time high, but in the previous two years, when the stock was the apple of wall street's eye, the shares more than tripled. experts say investors today are concerned about leadership at apple, with company founder steve jobs still on medical leave. analyst colin gillis also points to the lack of new gadgets. >> there's a little bit of concern about no new hardware. right? outside of the ipad 2, we did not get a new iphone in june and historically we've gotten one every year in the june timeframe. >> reporter: apple is expected to release a new iphone this fall, and experts say that could
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put some shine on the shares. in addition, apple seasonally does well in the third and fourth quarters, benefiting from back-to-school and holiday buying. for those reasons, gillis this week upped his 12-month price target for the stock to $430 a share. still, others worry apple is facing growing competition from other tablet makers, such as samsung. and, android smartphones are also giving apple indigestion. paul reynolds of "consumer reports" says customers like the bigger screens offered on many androids. >> even though iphone is still very strong and the single leading brand of smart phones, you take all of those android phones together and they are very formidable competition in many ways to apple. >> reporter: competition for new buyers, maybe. but what about current customers? >> i'm not going to change the brand i use, no way! >> reporter: suzanne pratt, "nightly business report," new york. >> susie: big moves in big bank stocks today. a trio of the largest names reported wildly different second quarter numbers, reflecting how the soft patch in the economy
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has hit banks in different ways. they are three titans of banking, but that's where the similarity ends between wells fargo, bank of america and goldman sachs. wells fargo was the only one of the three to beat expectations. reporting a 29% jump in profits. the gain was due mainly to releasing $1 billion. that money had been previously set aside to cover bad loans. c.e.o. john stumpf is cautiously optimistic, saying "while the economic recovery continues to be slower than expected, there are signs that businesses are investing for growth." >> reporter: instead of profit at bank of america, there was a record $8.8 billion loss. nearly all of that amount was due to a settlement with investors holding soured mortgage-backed securities. despite that, chief executive brian moynihan noted solid performance in the bank's underlying businesses and said
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b. of a. will not need to raise capital. goldman sachs reported a 77% gain in profits from a year ago, but wall street was hoping for more. although investment banking was strong, fixed income took a big hit. c.e.o. lloyd blankfein summed up the banking business this way, "the operating environment was more difficult given global macroeconomic concerns." joining us now with more analysis on the outlook for banks, fred cannon, director of research and chief equity strategist at k.b.w. >> fine, susie, how are you? >> susie: what do these reports tell us about the health of the banking system, and also about the u.s. economy? >> l the banking system is healthy, but not growing is what they're primarily telling us. and also, there's the haves and the have nots. wells fargo, and j.p. morgan differentiated themselves from the other large banks. other good news.
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but overall it's a mixed bag. and the economy as the businesses get bettered the cob suerm still has a big overhanging debt, what does this tell us about lenlding on that level? >> what's going on in consumer loans is we're seeing pick up in credit cards. american express or discover. at the same time, the mortgage loans in the u.s. are declining and probably are going to continue to decline for another yearo so. moegt home equities and first liens because it's taking so long to get resolution. today it takes 580 days between the time of a delinquency and a foreclosure. so people are living with the debt overhang for a long period of time and putteding a big drag on lending. soox*ud>> susie: as you know, t not a good year for bank
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stocks, and look at them, whether it's j.p. morgan. ok at this stock chart. it's down for the year. look at wells fargo. same story. and of course, at bank of america or citigroup they're down for the year. do you see that trend changing. >> we don't have any apples in the bank. the challenge we look for in the back half of the year is continuing problems. a lot of problems were overhang on the bank stocks are gone. worried about these capital levels. we know some of that. a lot of stocks -- yet the big issue out there is what's going on in europe and the contagion is endemnick these large financial institutions. until we get resolution, it's going to be tough for these stocks to outperform the market. >> susie: given that all of these stocks are down, and i understand what you're saying in terms of the global economy, are there buying
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opportunities here? >> there are. if you look at the valuations, all of these big financial institutions are trading at compelling valuations. the real issue for investors is which is a value, and which is a value trap. >> susie: which are i recommending? >> we like j.p. morgan and wells fargo. looks like they've got their companies on the growth track again. on the other hand, just like bank of america, quarter in and quarter out they a have overhang whether it's mortgages or something the next quarter. >> susie: goldman sachs, what's your take there. >> it's compelling, but that said we have a couple of issues overhanging right now. the trading environment is tough. if you think those things are going to turn around in a month like august, you're mistaken there.
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in the short term at a tough story. if you look at goldman sachs book value, they've produced revenues and profitability over the long period of time. we think people make money. >> susie: everybody wants to make money. thank you for coming on the program. and we have fred cannon, director of research at k.b.w. >> tom: tomorrow, our look at banks continues. we'll hear from community banks and why they feel they're being threatened by too much regulation in washington. still ahead, our "word on the street" is "dividends." what's driving the increase in payouts to shareholders, and a couple of divident-paying ideas. >> susie: president obama says there is now potential for bipartisan consensus when it comes to resolving the impasse over raising the debt ceiling. he praised a proposal from senators known as the "gang of six."
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they say they have a plan to cut the deficit by more than $4 trillion over the coming decade. but time is running out. exactly two weeks from today, if there is no deal on increasing the debt ceiling, the u.s. government will be unable to pay all its bills. darren gersh looks at what that would mean. >> reporter: without a debt limit increase, the world's most powerful country will be operating next month like the local pizza place-- whatever cash is in the till pays the bills. except there will be no cash in the till after august 2. and jay powell says that means the treasury will be writing checks against whatever cash comes in that day. and powell should know. as treasury undersecretary in the first bush administration, it was his job to manage the nation's debt. >> by our estimate, the government will get about $12 billion in inflows on august 3 and will have bills of about $32 billion. the biggest part of which, by far, is a social security payment. so there may not be enough cash
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to make that payment. >> reporter: in august, powell expects the government will collect $172 billion in taxes and some republican house freshmen have argued that's enough to cover interest on the national debt, social security, medicare, medicaid, payments to defense companies and unemployment benefits. but even assuming the treasury can picwhllich bis it pays, a questionable assumption, the government would be short $134 billion, leaving no money to pay troops and veterans, student loans, food stamps, the justice department, highway spending, air traffic control and on and on. powell says 10% of the nation's economy would be vaporized, and half the government will be out of business, unable to meet payroll or pay the rent. >> once we're not that country anymore-- we're the country that didn't pay its bills-- aren't people going to look at us differently? aren't they going to say "you did it once, how do we know you won't do it again?" >> reporter: this is not a government shutdown we're talking about. powell called that a rainstorm.
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failure to raise the debt limit, he says, would be more like a hurricane. darren gersh, "nightly business report," washington. >> susie: some tense moments in london this morning as newscorp c.e.o. rupert murdoch and his son james testified before parliament. a comedian stormed toward the senior murdoch, trying to hit him with a shaving cream pie. he wasn't hurt.
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both murdochs offered a string of apologies for the telephone hacking scandal that has engulfed their company, causing them to shut down their british tabloid "news of the world." >> this is the most humble day of my life. >> it's a mattered of great regret. mine, my father's and everyone at the news corporation. these do not live up to the standards that our company aspires to everywhere around the world. >> susie: despite the apologies, rupert murdoch said he would not step down as c.e.o., saying "i'm the best person to clean this up." shares of newscorp moved higher during the testimony. they finished the day up 5%, closing at 15.79. >> tom: very activelyl traded, really a broad rally today. let's take a look at tonight's market focus.
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stocks saw strong buying throughout the day thanks to earnings, thanks to positive housing numbers and hope for movement toward a deal on the debt limit. let's roll out day's trade of s&p. the s&p spent the entire session in the green, breaking out of its morning range in the early afternoon. that's when the president spoke about supporting a new debt- reduction plan. as we mentioned earlier, technology stocks led the way, even before apple's earnings results. i.b.m.'s better-than-expected quarter last night helped make it the best-performing dow industrial component today, rising more than 5.5%. how about this breakout? that puts i.b.m. at a new all- time high, jumping on better than twice its average daily volume. other dow gainers included microsoft and intel, each up at least 3.5%. couple of tech giants. microsoft earnings are thursday.
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intel's results come tomorrow afternoon and coca-cola jumped more than 3%. this is coke's highest price since 1998. second quarter earnings were a penny more than estimates. growth was driven by emerging economies china and india, while coke's north american business was flat. one of the drags on the dow today was health care company johnson & johnson. shares fell more than 0.5%, dropping to a three-week low. in reaction to earnings results. while earnings were better than expected, the company said fewer elective surgeries and doctor visits have held back growth. it left its forecast unchanged. that led to selling pressure. check out this move by harley davidson today-- almost 9% higher as volume increased four- fold. talk about get your motors running here! this is harley's highest price in almost four years, after reporting strong second quarter profits. u.s. sales were up for the first time since late 2006. harley raised forecast for how many bikes it will ship, despite
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the c.e.o. calling consumers skittish. beyond earnings, some talk of buyouts helped interdigital shares rocket up more than 28%. look at this nice move here, bouncing around, finally jumping today. this company holds thousands of wireless communication patents used by apple, research in motion, microsoft and others. the company is considering strategic options after a big sale of nortel's patent technology earlier this summer. one option may be a sale. the market responding to that. and the latest in the fight for pipeline company southern union. energy transfer upped its bid, trumping that of williams companies. southern union would get $44.25 in cash.h if they want to opt for that. shares closed just above that price. energy transfer slipped 1% and williams gained 2% as it loses out on southern union.
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yahoo reported results in line th estimats. and that's tonight's "market focus." >> tom: no deal on raising america's borrowing limit has not led to higher interest rates on government bonds, but the low rates on those i.o.u.s has led investors to search for higher pay out rates.ti that brings us to tonight's "word on the street," "dividends." david peltier is a portfolio manager at >> nice to see you.
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>> tom: how do you judge a healthy and sustainable stock dividend? >> sure. well, the first thing is iment to see a dividend at the high end of the company's industry. also, the company needs to have earnings to cover it. so i look for two times annual earnings korj of the annual dividend. >> tom: in the first six months of the year, 900 companies were raising dividends or begining to pay. increasing payouts by $30 billion almost in the pockets of shareholders. what's driving this? >> frankly, it's the underlying corporate earnings. the earnings are moving higher, and i think you're seeing a return to investors, and more buy backs and acquisitions. >> tom: you've got a couple of higher yielding picks thaw like here. darden restaurants, better known for red lobster and olive garden. it has seen the stock price jump to a new 52 week high. what's the drive for the price and the dividend. >> the company reported really good earnings. it's keeping a tight lid on costs. the latest dividend was 34%
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increase taking the yield to 3.4%. >> is that healthy for the restaurant space for a consumer stock? >> i think so, absolutely. when you look at the consumer stock. coke and pepsi, a lot of them yield one or two perce at most. >> tom: and you like dupont, global temical manufacturer. share price is near a 52 week high. a triple top on the kharlt in the mid-50s, yielding just over 3%. whal drives it? >> again, dupont has really good pricing power right now. input costs ridesing and dupont is a market leader. they can raise the prices they charge to customers. what i find interesting to dupont is they haven't raised the dividend in four years, but the company is on track for double digit earnings growth. i think they can afford to boost that dif denld. >> tom: penalty up demand.
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disclosure, do you own any of these? >> i knlt and i do not. >> tom: the link is on our website. word on the street. david peltier with >> susie: here's what we're watching for tomorrow: the nation's realtors report total existing home sales for june. we'll get an update on mortgage applications and crude oil and gasoline inventories, along with earnings from altria, a.m.r., ebay and intel. and, hilary kramer is our "street critique" guest. email your questions to could the big apple be the new world capital of technology start ups? if new york city mayor michael bloomberg has his way, the answer is yes. he wants to create a world-class science and engineering campus here. u.s. universities, including stanford, columbia and n.y.u., have expressed interest. the city would provide land to build as much as two million square feet of classrooms, labs and other buildings. >> tom: general motors is launching a new system to
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monitor power usage in its chevy volt. the program sends data from the car back to the power grid so utilities can better manage their energy demands. it uses the onstar system to monitor a vehicle's battery charge. using that information, power companies can balance demand and offer incentives to volt owners who charge their cars during off-peak hours.
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>> susie: facebook and american express are joining forces. their new program is called "link, like, love." it gives amex cardmembers special deals on the amex facebook page. tonight, some thoughts on the importance of social media and what you're missing if you're not using it. here' s alfred edmond junior, senior vice president and editor-at-large at "black enterprise." >> anyone who knows me knows that i love social media. on twd a dozen other social media plrmd
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laelan nnbr. if tweeting isn't your thing,
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friend us on facebook at bizrpt. and finally tonight, amazon has announced a new digital textbook rental program. students can rent electronic textbooks for as long as 30 days and store notes and highlighted sections even after the rental period ends. users will have access to tens of thousands of textbooks at up to 80% off the purchase price. the textbooks are not just for amazon's kindle, susie. students can download the books for apple, android and microsoft windows devices as well. why own when you can rent? >> susie: i think a great part of this is you don't have to carry all the textbooks and heavy backpacks. it's brilliant. >> tom: but you still need to do the homework. that's nightly business report. thanks for joining us. have a great night. >> susie: and i'm susie gharib, thanks for watching. hope you join us again.
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Nightly Business Report
WETA July 19, 2011 6:30pm-7:00pm EDT

News/Business. (2011) Alfred Edmond Jr., Black Enterprise; word on the street. New. (CC) (Stereo)

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